Friday, August 27, 2010

An update on our ITA Software acquisition



Last month we announced our plans to acquire ITA Software. Today, after meeting with many companies in the industry, we're even more excited about building new tools that will make it easier for consumers to search for flights, compare flight options, and get you quickly to a site where you can buy a ticket.

We’ve been encouraged by the travel industry support we’ve seen for this acquisition -- from airlines to online travel agencies. Even longtime travel guru Arthur Frommer said that "the existence of so many competing airfare search engines convinces me that the field will remain competitive even after Google enters it.”

While we think this acquisition will benefit travelers as well as those seeking their business, we know that closer scrutiny has been one consequence of Google's success, and we said that we wouldn’t be surprised if there were a regulatory review before the deal closes. This week we received what's called a "second request," which means that the U.S. Department of Justice is asking for more information so that they can continue to review the deal.

While this means we won't be closing the deal right away, we're confident that the DOJ will conclude that online travel will remain competitive after this acquisition closes. In fact, over the past few weeks online travel companies have noted that they have alternatives to ITA’s product: Kayak's CEO called Expedia’s Best Fare Search alternative "awesome"; Orbitz said that "Worldspan's e-Pricing search technology is a good solution that Travelport is devoting resources to develop. So we have alternatives available to us”; and Continental Airlines noted that "there are alternatives to the [ITA] shopping solution in the marketplace, both internally and externally.”

While we of course hope to continue working with ITA’s current customers, these comments demonstrate that competition will remain alive and well. We’ll be working cooperatively with the Department of Justice as they continue their review.

4 comments:

Just said...

Google seems keen on comparing ITA to the GDS systems (Sabre, Amadeus, etc.) Yet, ITA is fairly unique in that it more or less has the entire North American airfare search market locked up (I believe Delta/Northwest is the only major US carrier not using ITA on its web site). Sure, the GDS's have some competing products for search, but their main business is booking. ITA's main business is search. This does not help competitiveness, although it is probably good for ITA's customers and possibly for consumers. The DOJ should take a long, hard look at this in the proper context.

robm said...

Sure, DOJ should do a thorough review, but I honestly don't know what all the fuss is about. ITA didn't "lock up" the North American search market by stifling competition, unless being the best neutral search engine out there is intrinsically anti-competitive. I've been using ITA as a consumer for years, and I applaud Google for choosing the best out there to strengthen its efforts to provide travel search services.
What would be the consequences for consumers should the sale not be approved by DOJ? I'd say the downside would be significant. Disallowing the sale would not be in the public interest.

anancy said...

Google seems eager to ITA comparing the GDS, Sabre, Amadeus, etc. However, the ITA is unique because it is more or less the entire North American airline tickets search market locked.
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Ameen said...

I agree with robm. ITA has proven itself and in a free market, unless the intent is screaming 'bias', Google's acquisition of ITA should be applauded. Besides, they don't (yet) have a world-class booking engine - and that's no easy feat to manage. Look around, the 3 major GDSs have globally sewn up faring, search AND booking capability. The world needs competition.